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Team Contractors, LLC v. Waypoint Nola, LLC

United States District Court, E.D. Louisiana

August 2, 2019

TEAM CONTRACTORS, LLC, Plaintiff
v.
WAYPOINT NOLA, LLC, ET AL., Defendants

         SECTION: “E” (2)

          ORDER AND REASONS

          SUSIE MORGAN UNITED STATES DISTRICT JUDGE.

         Before the Court is a motion for judgment as a matter of law or alternatively for a new trial, filed by Defendant Waypoint NOLA, L.L.C. (“Waypoint”) under Rule 50(b) of the Federal Rules of Civil Procedure.[1] Plaintiff Team Contractors, LLC (“Team”) opposes.[2]For the following reasons, the motion is DENIED.

         BACKGROUND

         This dispute arises from contracts made in connection with the construction and renovation of Waypoint's property at 1250 Poydras St. in New Orleans (“the Project”). On September 19, 2014, Waypoint entered a contract with Development Construction Management LLC, represented by Steve Laski (“Laski”), under which Laski agreed to provide project management services for the Project.[3] On September 24, 2014, Team and Waypoint entered into a construction contract (“the Prime Contract”), under which Team became the general contractor for the Project.[4] Waypoint also entered into a contract with HC Architecture, Inc. (“HCA”), under which HCA agreed to serve as the project's architect.[5] HCA, in turn, subcontracted the mechanical, electrical, and plumbing design work to KLG, L.L.C. (“KLG”).[6]

         On April 13, 2016, Waypoint executed Change Order No. 9.[7] Team submitted three lien waivers to Waypoint on July 27, 2016.[8] Each lien waiver is labeled “Final Waiver of Liens” and includes an attachment listing outstanding sums owed to subcontractors.[9] The attachment to each of the three lien waivers lists different amounts owed to various subcontractors. Waypoint did not pay Team after receiving these first three lien waivers. On June 28, 2017, Team submitted a fourth lien waiver, which also was labeled “Final Waiver of Liens” and includes an attachment with a different list of outstanding sums owed to subcontractors.[10] On July 10, 2017, Waypoint paid Team the final payment amount of $1, 023, 514.09.[11]

         On July 22, 2016, Team drafted Change Order No. 10, incorporating Change Order Requests 33, 56, 58, 59, and 64-69.[12]

         On February 5, 2016, Team filed a complaint against HCA, KLG, and Waypoint.[13]Team alleged there were errors in the plans and specifications provided by Waypoint for the mechanical, electrical, and plumbing systems relating to the construction project, which were prepared by KLG.[14] Team also alleged Waypoint directed it to modify the MEP systems, but did not compensate Team for the additional costs Team incurred as a result of the modifications.[15] Plaintiff Team brought a breach of contract claim against Waypoint, alleging Waypoint's failure to compensate Team breached the construction contract.[16] Team also brought negligence claims against Waypoint, HCA, and KLG.[17]

         This Court conducted the first jury trial in this matter from February 26, 2018 to March 9, 2018. Three claims were tried: Team's breach of contract claim against Waypoint and Team's negligence claims against HCA and KLG.[18] Team did not pursue a negligence claim against Waypoint at trial.[19] The jury awarded Team $565, 979.99 in damages.[20] On the negligence claims against HCA and KLG, the jury found HCA and KLG's conduct violated their professional duties of care and caused damage to Team.[21]The jury also found Waypoint had not breached the contract.[22] However, the jury assigned Waypoint and its agent responsibility for damages.[23] When assigning “percentages of responsibility for the damages” awarded, the jury assigned 30% to HCA, 60% to KLG, 5% to Waypoint, and 5% to Waypoint's project manager Steve Laski, who was not a party to the suit.[24]

         On March 19, 2018, the Court entered judgment on the verdict against Defendants HCA and KLG for $509, 381.99, representing 90% of the total damages the jury awarded.[25] The Court entered judgment in favor of Defendant Waypoint on the breach of contract claim.[26] On April 2, 2018, Team filed a motion to amend, arguing the jury's finding that Waypoint did not breach its contract with Team was irreconcilably inconsistent with its assigning Waypoint and its agent responsibility for damages.[27]

         On September 6, 2018, the Court granted Team's motion.[28] The Court found the jury verdict irreconcilably inconsistent, vacated the judgment in favor of Waypoint on Team's breach of contract claim, and ordered a new trial on the claim.[29]

         The Court conducted the second jury trial in this matter from April 15, 2019 to April 17, 2019.[30] The trial was limited to Team's breach of contract claim against Waypoint.[31] Specifically, the Court limited the trial to (1) Team's breach of contract claim against Waypoint for Change Order Requests 33, 56, 58, 59, and 65, which were the unpaid change order requests finalized in Change Order No. 10 unrelated to design defects, and (2) Team's breach of contract claim for contractual interest based on Waypoint's failure to pay Change Order No. 9 until July 10, 2017.[32] On the final day of trial, Waypoint moved for judgment as a matter of law under Rule 50(a) of the Federal Rules of Civil Procedure.[33] The Court denied Waypoint's motion.[34]

         Team sought the following unpaid amounts under Change Order No. 10:[35]

• Change Order Request 33 (Proposed Change Order 75)

• $4, 812.58

• Change Order Request 56 (Proposed Change Order 108)

• $8, 697.59

• Change Order Request 58 (Proposed Change Order 110)

• $10, 098.02

• Change Order Request 59 (Proposed Change Order 111)

• $13, 000.00

• Change Order Request 65 (Proposed Change Order 117)

• $28, 217.30

         These amounts total $64, 825.49.

         The jury found Team established by a preponderance of the evidence that Waypoint breached the contract by not paying Team for the amounts in Change Order Requests 33, 56, 58, 59, and 65, and awarded damages in the following amounts:[36]

• Change Order Request 33 (Proposed Change Order 75)

• $4, 812.58

• Change Order Request 56 (Proposed Change Order 108)

• $6, 000.00

• Change Order Request 58 (Proposed Change Order 110)

• $10, 098.02

• Change Order Request 59 (Proposed Change Order 111)

• $13, 000.00

• Change Order Request 65 (Proposed Change Order 117)

• $25, 835.83

         These amounts total $59, 746.43. The jury also found that Team established by a preponderance of the evidence that “Waypoint breached the contract by unreasonably deciding not to pay Team for Change Order No. 9, plus retainage, ” at two times: “within thirty days of Waypoint's signing Change Order No. 9” and “after Team's submission on July 27, 2016.”[37]

         On May 22, 2019, the Court entered an Order and Reasons finding Team was entitled to contractual interest and attorneys' fees.[38] The Court found contractual interest began to accrue on May 13, 2016, which was thirty days after Waypoint signed Change Order No. 9 on April 13, 2016.[39] The Court entered judgment for Team and against Waypoint in the amount of $113, 766.36, representing the total of the contractual interest due on Change Order No. 9, the amounts awarded by the jury under Change Order No. 10, and contractual interest due on Change Order No. 10.[40]

         On June 19, 2019, Waypoint filed the instant motion for judgment as a matter of law and alternatively for a new trial.[41] Team opposes.[42] Waypoint has filed a reply.[43]

         RULE 50(b) STANDARD

         Rule 50(b) of the Federal Rules of Civil Procedure provides:

If the court does not grant a motion for judgment as a matter of law made under Rule 50(a), the court is considered to have submitted the action to the jury subject to the court's later deciding the legal questions raised by the motion. No. later than 28 days after the entry of judgment--or if the motion addresses a jury issue not decided by a verdict, no later than 28 days after the jury was discharged--the movant may file a renewed motion for judgment as a matter of law and may include an alternative or joint request for a new trial under Rule 59. In ruling on the renewed motion, the court may:
(1) allow judgment on the verdict, if the jury returned a verdict;
(2) order a new trial; or
(3) direct the entry of judgment as a matter of law.[44]

         “A party is entitled to judgment as a matter of law ‘only if the evidence points but one way and is susceptible to no reasonable inferences which may support the opposing party's position.'”[45] The Court does not “weigh evidence, judge witness credibility, or challenge the factual conclusions of the jury. Judgment as a matter of law is appropriate if there is no legally sufficient evidentiary basis for a claim under the controlling law.”[46]

         LAW AND ANALYSIS

         I. Contractual Interest Claim

         The final payment term in the Prime Contract required Team to submit “a release in a form reasonably acceptable to the Owner of liens and claims executed by the Contractor and by each of its subcontractors on behalf of which payment is requested.”[47]In the instant Rule 50(b) motion, Waypoint argues Team is not entitled to payment of interest because Team did not show at trial that Waypoint acted unreasonably in not paying Team.[48] Waypoint asserts it acted reasonably because Team did not submit lien waivers executed by each of its subcontractors on behalf of which it requested payment. Waypoint argues that, as a result, no reasonable juror could have found Team proved Waypoint acted unreasonably.

         At trial, counsel for Team elicited testimony that the final payment terms of the Prime Contract were modified. On cross-examination, Waypoint's project manager Steve Laski admitted Waypoint did not follow the Prime Contract's requirement that the architect approve all pay applications because “[i]t's not required by the lender, ” and “[y]ou end up following what the lender requires.”[49] Christopher Robertson, Waypoint's principal, admitted that he did not know whether the parties “submitted any of the pay applications to the architect for approval, ” or whether Waypoint followed the Prime Contract's provisions regarding final payment.[50] Robertson also testified as follows with respect to subcontractor lien waivers:

Q. During this project, you required as owner, as the lender required, it was a lender requirement, that Team and its subcontractors execute interim lien waivers, correct?
A. Yes, sir.
Q. And at no time did Team or any of its subcontractors ever refuse to submit the lien waivers, the interim lien waivers?
A. No, sir.
Q. And, in fact, you were supplying the form or the language that needed to be in those lien waivers, correct?
A. Yes, sir.
Q. So it was Waypoint's responsibility to tell Team: This is what we need. Supply it to us?
A. Yes, sir.
Q. And, in fact, before you made the final pay application, you had to have lien waivers in place to get that ...

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